jdiercks
Confused about dryer sheets
Adjusting to the Fiscal Cliff is Important!
The key to whatever happens with the so called fiscal cliff is to adjust. Have you ever noticed that study after study has shown that the wealthy never pay more than a certain percentage of their income in taxes [mod edit]. What they do that is so important is they plan for whatever comes and take action before something sunsets or changes.
So for retirees that might mean simple things like maximizing your deductible retirement contributions to IRAs or 401k's (if you are still making earned income of some kind). This reduces your adjusted gross income and lowers the threshold for itemized deduction phase outs in the future.
In 2012. it might mean accelerating income to take advantage of likely lower rates, for example collecting on that amount you lent to your son with interest. It might also mean deferring deductions, if possible, until 2013 when they are more useful. For example, you could wait until January 1st to make any kind of mortgage or debt payment to have that payment and related interest count in 2013 (assuming that does not make the payment late and result in late charges or default).
It also may mean taking advantage of current tax regulations that are favorable to retirees. An example, it might make sense to be loading up on your medical costs in 2012 if you have a chance to meet the 7.5% of adjusted gross income floor before year end. This is because that floor rises to 10% in 2013.
It would also make sense for those with liquid high net worths to consider giving or estate planning before year end as the gift and estate laws are likely to revert back to prior tax laws and a $1 million estate and gift exclusion.
The key to whatever happens with the so called fiscal cliff is to adjust. Have you ever noticed that study after study has shown that the wealthy never pay more than a certain percentage of their income in taxes [mod edit]. What they do that is so important is they plan for whatever comes and take action before something sunsets or changes.
So for retirees that might mean simple things like maximizing your deductible retirement contributions to IRAs or 401k's (if you are still making earned income of some kind). This reduces your adjusted gross income and lowers the threshold for itemized deduction phase outs in the future.
In 2012. it might mean accelerating income to take advantage of likely lower rates, for example collecting on that amount you lent to your son with interest. It might also mean deferring deductions, if possible, until 2013 when they are more useful. For example, you could wait until January 1st to make any kind of mortgage or debt payment to have that payment and related interest count in 2013 (assuming that does not make the payment late and result in late charges or default).
It also may mean taking advantage of current tax regulations that are favorable to retirees. An example, it might make sense to be loading up on your medical costs in 2012 if you have a chance to meet the 7.5% of adjusted gross income floor before year end. This is because that floor rises to 10% in 2013.
It would also make sense for those with liquid high net worths to consider giving or estate planning before year end as the gift and estate laws are likely to revert back to prior tax laws and a $1 million estate and gift exclusion.
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